A traditional method of shopping for a product that may require a loan, such as a house or vehicle, involved the car buyer selecting the product and applying for a loan through the merchant supplying the product such as, for example, a car dealership. The car dealership would access the loan department for several banks and apply for the loan using information provided for by the car buyer. Upon receipt of an approval by the bank for a loan, the car dealership would present the loan terms to the car buyer, and upon approval by the car buyer, the card dealership would submit the necessary paperwork to complete the loan processing.
Because of an increased access to banks, car buyers are increasingly shopping multiple banks for automobile loans prior to, or in conjunction with, shopping for their automobile. The car buyer, upon review by the bank of an application for the loan, will be presented with loan terms. If the car buyer applies at several banks, the car buyer can compare offers and select the offer that best fits their expectations or needs. The car buyer may therefore secure financing for the automobile loan in a manner independent from the dealership in which the purchase is to be made.
To facilitate the transaction, once a bank approves an application for a loan and the applicant accepts the loan, the bank may send the applicant a site draft or a certified bank check. A site draft is essentially a check issued by the bank for a specific purpose, that is, to purchase an automobile. After receiving the site draft, when the buyer selects a car for purchase and finalizes the purchase price with the dealership, the car buyer fills in relevant information on the site draft and hands the site draft over to the dealership as payment for the car.
Unfortunately, site drafts or certified bank checks may not be readily acceptable to the merchant supplying the product such as the car dealership. For example, car dealerships may be hesitant to accept a site draft because of a perceived extended time for the site draft or certified check to clear, thus dealing the time in which the loan funds are deposited into the car dealership's bank account. To try to avoid that delay and receive their money sooner, car dealerships may attempt to steer or offer the car buyer into a loan provided by one of the banks associated with the car dealership. Additionally, because the site draft or certified check is a paper document, the same or similar fraud issues with transporting checks, both through the postal system and while shopping for a car, may also apply to a site draft. The site draft may be stolen and used in a fraudulent transaction. Additionally, the site draft may be used by the applicant for an unauthorized purpose.